Major European insurer reports huge profits on back of Asian expansion

Major European insurer reports huge profits on back of Asian expansion

Major European insurer reports huge profits on back of Asian expansion by Michael Mata

According to Prudential plc, Asia’s burgeoning middle class is investing heavily into savings and retirement, which in turn is creating a large demand for savings and insurance schemes. This demand has helped boost Prudential’s operating profits by 6% to a better-than-expected $2.68 billion in the first half of 2016.

Sales in Hong Kong grew by 58% as Prudential builds more links in the SAR and in mainland China. Moreover, new life insurance sales in Asia totaled $2.16 billion in the first six months of 2016, an increase of 21% and greater than the amount Prudential sold in the United States and United Kingdom combined.

Despite a mixed performance in recent months, Prudential’s large back-book of existing savings in the US and UK markets continues to generate the lion’s share of its profits. Prudential’s UK retail business reported an increase of 51% in new sales to $772 million as well as an 8% rise in operating profit. These surges were the result of a robust demand for the company’s PruFund platform as more Britons save for retirement.

“The secular, global trend of increasing self-reliance of the middle class to provide for savings and retirement, be it by a fast-growing, wealthier but younger population in our Asian markets or by a growing number of retirees in the US and the UK, remains intact despite the macro-economic uncertainty including the effect of historic low interest rates,” said Prudential CEO Mike Wells.

M&G, the Prudential Group’s asset management arm, experienced a 10% fall in profits to $293 million as investors pulled out nearly $9 billion from their accounts because of the uncertainty surrounding the EU referendum. M&G recently appointed Anne Richards as its new boss to spearhead an overhaul. One of Richards’ first acts was to explore an expansion in Dublin following Brexit.